Owner's title policy

An owner's title policy insures the buyer against title defects that existed before closing and were not found by the search.

It is optional. That single fact explains why so many homeowners discover, years later, that the title insurance they remember paying for at closing does not cover them.

Owner's and lender's are different policies#

The lender's policy insures the lender, in the amount of the loan, decreasing as the loan is repaid, ending when the loan is repaid.

The owner's policy insures the buyer, in the amount of the purchase price, for as long as they or their heirs hold an interest.

They cover the same property, are issued by the same insurer, on the same search — and one of them protects you.

The buyer usually pays for both#

Or rather, the buyer usually pays for the lender's policy as a loan cost, and is offered the owner's as an additional item.

Where the owner's policy is declined, the money the buyer spent on title insurance protects the lender's interest and nothing else.

A cash buyer with no lender's policy and no owner's policy has no title protection at all, which is worth stating because cash purchases at auctions and tax sales are exactly the transactions with the weakest deeds.

Simultaneous issue#

The reason it is cheap.

Purchased at the same time as the lender's policy, an owner's policy costs a fraction of a standalone one, because the search, examination and underwriting have already been done.

That rate is available at closing and not afterwards. A buyer who declines it and later wants coverage is buying a standalone policy at full price, if an insurer will write one at all.

What it pays for#

Loss where a covered defect is established.

Defence. The insurer defends the title against a covered claim, which is frequently worth more than the loss coverage — a quiet title action over an undisclosed heir costs real money before anyone establishes who is right.

Reading the exceptions#

The exceptions schedule lists what the policy does not cover: matters found in the search that the parties chose to accept, survey issues where no survey was obtained, and standard exceptions the insurer applies generally.

Some standard exceptions can be removed by supplying a survey or an affidavit. That is a conversation worth having before closing rather than an item to skim.

Where it earns its cost#

Inherited and long-held property with unprobated estates in the chain. Foreclosure and tax-forfeited purchases conveyed by limited-warranty or authority-based deeds. Anything where the history is long and the paperwork is thin.

Which is most of what this glossary is about.